UK Inflation falls – 16th April 2025

The UK’s Consumer Prices Index (CPI) rose by 2.6% in the 12 months to March 2025, down from 2.8% in February. This was primarily driven by falling fuel prices and stable food costs, partially offset by rising clothing prices. 

Key figures: 

• CPIH: Increased by 3.4$ in the 12 months to March 2025, down from 3.7% in February. 

• Core CPI: Excluding energy, food, alcohol and tobacco, rose by 3.4% over the year to March 2025, a slight decrease from 3.5% in February. 

• Services Inflation: Services prices increased by 4.7% in the 12 months to March 2025, down from 5% in February. 

Sector Highlights 

• Transport: Motor fuel prices fell by 5.3% over the year, contributing significantly to the overall decrease in inflation. 

• Recreation and Culture: Prices in the category rose by 2.4% over the year, the lowest rate since October 2021. 

• Clothing and Footwear: Prices increased by 1.1% in the 12 months to March 2025, reversing a 0.6% decline in February. 

Despite the current slowdown, inflation is expected to rise in the coming months due to anticipated increases in utility bills and employer taxes. The Bank of England has reduced rates from a peak of 5.25% to 4.5% through a series of cuts since August 2024 and some analysts are anticipating another rate cut in May to support the economy amid slowing inflation but the Bank will look to balance this with the impact of Trump’s tariffs and slowing global growth.